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A Review of ‘Local Money’ by Peter North

“I’ve really enjoyed the last three books to come out of the Transition Books stable, so I was pleased to see the latest instalment was out: Local Money – how to make it happen in your community. It’s another big square book, following Local Food, and it’s got the same practical, inspiring, can-do approach. This time, it’s all about creating local money networks.

The Transition Towns movement is all about resilience – preparing towns for the challenges of climate change and peak oil. What’s money got to do with it, you may well ask, but money is a valuable tool in relocalisation. Our current money system doesn’t serve us very well. It is beyond our control, in the hands of bankers and politicians and people we might hesitate to trust. It flows in vast quantities to people who don’t seem to do very much to earn it, while others work hard for very little. It is endlessly available for some tasks, and in short supply for other very necessary things. Most of all, it has an unpleasant habit of vanishing out of the places where we live and ending up in London and New York. Local money is a way of re-imagining money as the tool it should be, rather than the master it often becomes.

Since money is just an agreed mechanism of exchange, there are many different kinds of money, and endless possibilities for re-creating it. Local Money begins with an introduction to money and a history of alternative currencies, and then dedicates a chapter each one to a series of experiments with money. Time banking is one, a currency based on hours of work, and a great way to value all labour equally. Local Exchange Trading Schemes are an less formal way for people to trade skills that were successful in the past. North then explains the four Transition currencies so far, and ends with some tantalizing glimpses of the future of money, including feed-in tariff based bonds, mobile phone money, and tradeable energy quotas.

Among the more interesting systems that the book explores are Germany’s regional currencies, which operate alongside the Euro. Reading at a time when the Euro is in considerable danger, I bet Germany is glad it put the regional alternatives in place. “Monoculture of money,” says Peter North, “just like a monoculture of crops, is not resilient.” I’m not sure why I hadn’t heard about it before, but Germany has “a rich ecosystem of currencies”, as North puts it. Each one serves a different purpose, and this is perhaps the closest to the healthy and resilient model that the Transition Towns are after.

Totnes, Lewes, Stroud and Brixton are the three Transition currencies. They each have a slightly different philosophy, Stroud being the most radical – it is democratic money, owned by a co-op. The main aim of these currencies is to build the local economy and encourage more local supply chains. It’s a little early to tell whether it’s working or not, and North hints that they are “perhaps mere glimpses of what could be” in future. This is the really practical bit if you’re ready to have a go at creating your own money – lots of advice about getting buy-in from businesses, how much to print, why you should think long and hard about the name of your currency, tax implications, and so on.

There are some real strengths to Local Money. Peter North knows that everything in the book is an experiment, and that there’s no one formula. It’s an iterative process, and the book is great at breaking down historical examples to see what worked and what didn’t. It’s honest too, acknowledging the failures and limitations of what has been tried so far as well as the successes. If you’re ready to embark on the rather exciting journey of local money in your town, this is the most helpful book I’ve come across so far.

However, if you’re not that far along, the book is less useful. The previous Transition book, Local Food, had all kinds of different projects of varying levels of complexity. Whatever stage your town was at, there were inspiring ideas to get started. Local Money starts further along the road, with actual currency, when there are lots of smaller ways to build resilience in the local economy. I’d have loved to have read about local loyalty cards, such as the Wedge Card in London, or the 3/50 Project that invites people to pledge to spend money in three favourite local businesses. Both of these are a whole lot simpler, quicker, and less risky than launching a fully fledged alternative currency. But perhaps that’s for another book, a Local Economies title perhaps.

There’s also a lot more that could have been included. Local currencies aren’t the only way to generate local money, and it would have been great to hear more about zero interest banks (see Jak), peer to peer lending, shared equity mortgages, local banking and credit unions, local bonds, microfinance, or the ‘moneyless’ credit clearance schemes that Thomas Greco champions. Some of these get a passing mention, but they could all be considered valid options for making local economies more resilient and deserve more attention.

In other words, Local Money is great on currencies, but could have been much broader in scope. The Transition currencies are wonderful experiments and this book will get you well on your way to launching your own, but there is so much more to try.

14 Comments

The fundamental problem with money is that it is an abstraction, and as such it can have whatever “meaning” we want to attach to it.

Further, the essence of the abstractions by which we manage our lives has to do with their “information quality,” which can be seen as the relationship between our abstract ideas and the reality of the complex and dynamic, physical, ecological, and cultural world we live in.

The global financial system and its many national components have been involved–mainly without intent–in destroying the “information quality” of money by a constant increase in the amount of money in play relative to the amount of energy available to do the work that money represents.

Thus, we are living in a time of accelerating, and mainly hidden, inflation, which has the mainly (for a while) invisible effect of confusing the operating realities of our lives.

This can be rectified by creating a better linkage between the meaning in our (abstract) monetary system and the physical reality of the systems in which we live.

Of course, you would hear none of this from the economics departments in our universities, whose perspective on the world is all about “money.”

However, this can, and will change as we increasingly experience the circumstances of reality and begin to apply our real intellectual capabilities to the challenge of learning to live in a world powered by (changing) available energy and the need to understand just what that means to our–and our children’s–lives.

For communities which are not yet “ready to embark on the rather exciting journey of local money in your town,” I highly recommend _The Sharing Solution_ by Janelle Orsi and Emily Doskow (Nolo 2009).

When I went through the Orsi book and made a list of all the ways of sharing already existing in my extended community, it became an exciting catalog of the local economy already beginning to work here.

When we read so often about the Totnes Pound and the other UK paper currencies, it becomes easy to forget that other (non-currency) methods of sharing between community members might be equally as powerful in cultivating local economies. Many types of non-currency community finance systems are relatively easy to set up, and many have no financial cost to set up.

Also, non-currency systems like LETS and time banks can remove the “barrier to entry” that often occurs when a system requires a person to exchange a unit of national currency for the new local currency in order to enter the system. Having a barrier to entry can perpetuate economic class divides (where the wealthy begin using the local currency but the poor can’t afford to buy in).

Thanks Joanne for an excellent comment and for pointing out “The Sharing Solution”. I’ll try to read it soon.

The underlying issue, as I think you agree, is helping people to provide for each other in ways that promote wellbeing instead of just increasing money flows.

Local currencies of the Berkshire/Totnes/Lewes etc. or LETS or Time Bank varieties may help in this, may make the giving and receiving more familiar, but it is the organised mutual support that we are trying to arrange: all the practical ways of sharing food, transport, goods, etc. as you describe on your website for Westchester, and much else, to be developed, until we have working resilient local economies.

On how easy it is to set up a local money scheme: I think in the book I show that setting up a basic LETS is very, very easy, especially given the support there is on line. The harder bit is keeping them going, and deepening the range of services that are available.

Just share? Sure – if that’s what you are into.

But, I would suggest that if we really want to build resilient local economies then we have to go beyond the ‘usual suspects’ who probably share between each other, help each other out, use Freecycle/Freegle etc already. Money can be useful when some people want to ‘pay their way’, not feel obliged to others. This comes out very strongly in the experiences of LETS.

Secondly, we need to involve existing local businesses, co-ops and the like in our project of building resilent local economies, and develop new ones so we produce more of the things we need locally. I think this means we need to go beyond just sharing. (Not that Ive anything against shgaring at all – do it all the time!)

I can confirm that the Local Exchange UK software (as mentioned in Pete’s “Local Money” in the chapter on LETS) is open source, and works well for LETS groups (Falmouth LETS – http://falmouthlets.org.uk – is an active group that has been using it for 18 months now).

LETSlink UK, the national development agency for LETS, has it as top recommendation for software, and is also usable for any hours based or other mutual credit system, so would also be usable for running a skills exchange within a Transition group.

The software is available via LLUK’s comparative web site for complementary currency software – http://cxss.info (see the Local Exchange forum there for download links).

I’ll be demonstrating it at workshop(s) for LETS groups in Devon (Plymouth, Sun 8 Aug, and hopefully also Exeter, Sat 7th Aug) – should anyone wish to attend either of these please contact me direct via Falmouth LETS site as above, or via http://transitionfalmouth.org.uk.

There’s also a demo site for use by those considering installing it. Please contact me as above if you’d like to try it out.

Alex1 Aug 4:24am

@Bart Anderson – yes, small problem. I believe that credit card processing providers have thought of that trick so their contracts include a clause that you’re not allowed to charge credit card payers more than cash payers.